Off The Wire
Japan Abe pledges 'timely' steps to fight risks, signals more spending
TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe said on Thursday the government will consider what policy measures it can take to prevent heightening global uncertainties from derailing the export-reliant economic recovery.
Economy Minister Yasutoshi Nishimura also said the government would take timely steps “without hesitation” to underpin economic growth, signaling the Abe administration’s readiness to deploy additional fiscal spending to prevent another recession.
“We’d like to consider what we can do now, as we need to take macroeconomic policy steps in a timely fashion,” Abe told a meeting of the Council on Economic and Fiscal Policy (CEFP), the government’s top economic council.
Abe’s comments followed a proposal made to the panel’s private-sector members for the government to undertake “flexible” policies as escalating overseas risks cloud the outlook for Japan’s economy.
“The government should use the current low interest rate environment to underpin demand by boosting government-funded investment programs,” the members said.
“We hope the Bank of Japan takes additional monetary easing steps without hesitation if the economy risks losing momentum to achieve its inflation target,” they added.
The proposals by the private-sector members form the basis of the government’s long-term economic policy platform.
Japanese policymakers have been under pressure to fend off heightening overseas risks with a diminishing tool-kit, as the U.S.-China trade war and soft global demand hurt the export-reliant economy.
While robust domestic demand has offset some of the pain from weak exports, analysts polled by Reuters expected the economy to have expanded at a slower pace in July-September than the previous quarter, as a strong typhoon and rainy weather weighed on private consumption.
An increase in the sales tax to 10% from 8%, put in place from October, may also hurt consumption, analysts say.
The BOJ kept monetary policy steady last month, but signaled its readiness to maintain or even cut already ultra-low interest rates if the economy risks losing momentum to hit its elusive 2% inflation target.
Abe said the government would compile an emergency support package of at least 130 billion yen ($1.19 billion) for disaster relief from last month’s typhoon, which will be approved by a cabinet meeting on Friday.
Reporting by Leika Kihara and Daniel Leussink; Editing by Alex Richardson